Hole in road accounts earns Brown £2.1bn

Gordon Brown's chances of meeting his financial targets have been given a dubious boost, after 'accounting errors' on road spending handed the Chancellor a staggering £2.1billion windfall.

The Office for National Statistics (ONS) said it was changing the way it accounted for spending on road repairs and this meant the public finances now appeared to be in better health.

An ONS review found it had made a mistake by "double counting" some spending on roads since 1998/9.

Correcting this error would mean reducing current expenditure and increasing net investment, which is beneficial for the Chancellor as one of his "golden rules" says he should only borrow to invest over the economic cycle.

The changes by the ONS increase the current budget measure for the past five years by £2.1billion in total, giving the Chancellor extra leeway to meet his target.

'Convenient timing'

However, the Conservatives said Mr Brown would still be forced to raise taxes after the general election to fill an annual £10.5billion "black hole" in the nation's coffers.

Shadow chancellor Oliver Letwin said: "At best the timing of these changes is very convenient for the Government. There will inevitably be suspicions that the figures are being fiddled."

This was dismissed by a Treasury spokesman who said: "As the Chancellor has made repeatedly clear, there will be no relaxation of fiscal discipline in weeks and months ahead.

"Independent of today's decision by the national statistician, as the pre-budget report and subsequent data have made clear, the Government is meeting its fiscal rules."

Economists questioned whether the Chancellor will be able to meet his fiscal rules because of a shortfall in revenues to cover his spending plans.

Investec economist David Page said: "It does make it easier for Mr Brown to balance his books to the tune of £2.1billion to date and probably more over the next two years.

"We think he'll meet his fiscal rule but whether he'll be able to do that without making other changes to his methodology of calculating his rule... we're not sure."

A significant change would be the timing of the end of the current economic cycle as it would be easier for the Chancellor to meet his fiscal rules if he brought the cycle to a close this year, he said.